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WASHINGTON – Bank of China has agreed to pay $20 million in fines to U.S. and Chinese authorities in a deal announced Friday resolving cases of alleged misconduct at one of the bank’s New York branches.

The transgressions allegedly included preferential treatment to customers with personal relationships with bank officials and fraudulent letter-of-credit and loan schemes, said the Office of the Comptroller of the Currency, a division of the Treasury Department that oversees U.S. branches of foreign banks and nationally chartered banks.

The consent order also requires all three of Bank of China’s U.S. branches – including another in New York and one in Los Angeles – to take several actions, including ceasing business with 34 individuals and companies and any entities related to them and strengthening its risk management division.

Bank of China – China’s main foreign exchange bank – did not acknowledge wrongdoing but said it has already taken steps to ensure such “past imprudent and unsafe management” will not occur in the future.

In one example, the bank gave a $1 million line of credit – increased within months to $7 million – to a start-up metals trading firm that showed losses and operated out of the owner’s apartment. The line of credit eventually grew to $18 million, almost all of which had to be written off as a loss, said Robert Garsson, a spokesman for the comptroller’s office.

At the same time, the company was given a $50 million low-interest loan and allowed to deposit the proceeds at a much higher interest rate at another branch – effectively making a profit from the bank.

Another $12 million was loaned to an entity believed to be the owner’s wife and $3 million loaned to a company controlled by his housekeeper – all of which was lost by the bank, Garsson said.

The alleged misconduct by former senior executive management and other personnel took place from 1991 to 1999 and resulted in significant – but unspecified – losses to the New York branch, the comptroller’s office said.

Wang Xuebing, who headed the Bank of China’s U.S. operations from 1988 to 1993, was fired earlier this week from his post as president of another of China’s four major state-run commercial banks, the China Construction Bank in Beijing.

No reason was given for his dismissal, but it came amid reports of the U.S. and Chinese investigation into Bank of China. Wang was president and vice chairman of Bank of China from 1993 to 2000.

While saying that further action against the bank is unlikely, Garsson acknowledged that it has not yet been determined whether former bank officials or customers would eventually be targeted.

The consent order requires the New York branch to pay $10 million to the U.S. Treasury. In Beijing, the parent bank agreed to pay $10 million to China’s central bank. Garsson said it is the largest civil penalty ever levied by the comptroller’s office.

“The Bank of China is ruling out managerial deficiencies that might cause similar problems,” said a statement from Bank of China president Liu Mingkang.